Tax Cuts Vs. Gas Prices

Tax Cuts Vs. Gas Prices


Most Americans haven’t noticed much of a tax cut windfall in their paychecks, but there’s a good chance they’re noticing gas prices as they climb toward $3 a gallon, and that could have negative repercussions for Republicans this fall.

“The increased cost of fuel is already wiping out a big chunk of the benefit Americans received from the GOP tax cuts,” Politico’s Ben White writes, leaving some voters feeling less well-off despite the tax overhaul.  

Morgan Stanley estimated that $3 gas would wipe out roughly a third of the tax cut benefit flowing to American workers, and White points out that the economic impact will be felt most acutely by members of Trump’s rural, working-class base, who are receiving only a modest boost from the tax cuts but who are more vulnerable to higher gas prices due to low wages and long driving distances.

Over time, the rising price of gas may weigh on economic confidence and reduce consumer spending – not the situation Republican are hoping for as they seek to convince voters that their tax cuts are acting like “rocket fuel” for the American economy.